100% penalty for tax dodgers

Tax dodgers will be slapped with penalties of 100% of their total arrears from next year, warns the Inland Revenue Board (IRB).

Its chief executive officer Datuk Sabin Samitah said defaulters were currently imposed a 45% penalty of the arrears owed if they settle within six months but from 2018, the penalty imposed would be more than double the rate.

“If the arrears owed are RM1mil, the penalty next year would be RM1mil. The defaulter would have to pay RM2mil,” he told a press conference after launching Operasi Gegar Bersepadu, a nationwide operation to increase tax collection and compliance.

Urging defaulters to come forward, he said the higher penalty would be imposed across the board, on individuals and companies.

Sabin stressed that the penalty was not inclusive of the arrears which also had to be settled.

He said there was no need for the law to be amended as IRB was allowed to impose penalties of between 100% and 300%.

“Only IRB’s audit and investigations framework, which includes the penalty structure, needs to be changed for next year.”

He said defaulters were given the last two years to voluntarily settle their arrears and had until the end of this year before the new penalty would be imposed.

“That’s enough time,” he said.

Sabin said IRB had taken action against a number of companies for tax evasion, including multinationals, government-linked companies and small-and-medium enterprises.

He said 10 companies have settled their arrears, totalling over RM800mil, including the 45% penalty.

A further RM1.4bil involving another 20 companies would be finalised by the end of this month.

Sabin said the names of these companies will be made public only if they refused to pay up and the cases reached the courts.

The five-day Operasi Gegar Bersepadu, which started on Monday, is to create awareness among those who are not paying taxes.

The operation included audits, issuing summonses, travel restrictions on defaulters and checks on employers who failed to make monthly tax deductions for employees. It involved 2,117 IRB officers nationwide. Sabin said the operation was among IRB’s initiatives to achieve the RM127.7bil tax collection target set by the Government this year.

Next month, the IRB will be setting up a new civil legal branch comprising 200 officers tasked with hauling up defaulters to court.